The Importance of Condo Audits

The complexity of daily life in a condominium, regardless of its size, demands a professional approach to management. Legal issues facing administrators require that all actions by the manager and the administrative team be guided by professionalism, integrity, and consistency with assembly decisions, demonstrating the administrators' probity.
Throughout the year, it is recommended to conduct periodic audits of the condominium's accounts, books, invoices, and administrative actions. This facilitates verification for residents. The annual General Assembly, where the condo fee amount is reviewed, is always a contentious topic among residents. Submitting financial calculations and needs to an independent audit process provides security to the entire community involved regarding the accuracy of the proposed amounts and the administration's integrity.
According to ABNT NBR ISO 19011:2018, an audit is a systematic, independent, and documented process for obtaining objective evidence and evaluating it objectively to determine the extent to which audit criteria are met. Therefore, a condominium audit must be conducted independently by a company with no ties to the condominium or its residents. This company must have the freedom to identify any non-conformities regarding expense verifications and actions decided in resident assemblies.
It is the auditor's role to evaluate, month by month, the invoices for products and services acquired and contracted by the management, as well as to assess the actions and deadlines of activities decided in the assembly minutes. At the end of the audit, which should be performed periodically, the condominium management receives a report with the auditor's opinion on whether the reported decisions have been met and the legitimacy of the expenses incurred.
Although it is a decision for each condominium management to make, there is no set frequency for conducting audits. However, the more frequent the audits, the simpler corrective actions become, and the smaller the impact of any non-conformities on the administration. Ideally, at least once a year, a consultancy should be invited to participate in the assembly to present the year's results and their final opinion on whether the management's accounts and administrative actions are recommended, recommended with reservations, or disapproved.
Condominium audits, unlike audits conducted in corporate management systems, do not follow specific standards. Quality management systems, compliant with, for example, ISO 9001:2015, environmental management systems governed by ISO 14001:2015, or occupational health and safety management systems according to ISO 45001:2018, require periodic audits to verify that the management system is implemented and maintained. Such audits must be carried out by internal personnel (internal audits) and, at least once a year, by representatives of the certifying body. Condominium audits, on the other hand, can be conducted at frequencies established by the condominium itself, without the need for certifying bodies or others. However, good compliance practices recommend that such audits be conducted independently, meaning by professionals who are neither residents nor have personal or professional ties to the manager, employees, or residents.
Conducting such audits not only provides security for residents and peace of mind for the manager regarding the approval of their accounts but can also propose improvements to the condominium's management itself. It is very common for purchases to be made based on a single quote, which is not recommended for administrative responsibility purposes. However, non-conformities cannot be pointed out if there isn't a formal procedure establishing this practice.
Audits can be used as improvement tools, making management more professional and less dependent on the manager's personal decisions and actions. Considering the legal implications a manager can face, it is important that activities are documented and known to all, ensuring transparent and adequate management. It is worth remembering that in many condominiums, the manager is also a resident, and if they are a professional manager, their administration should be closely monitored by residents without doubts about their integrity.
Hiring a professional condominium audit is much more accessible than one might imagine, especially when considering the peace of mind gained in presenting results to the residents' assembly, making it an extremely viable investment in relation to its cost.
Contact us and learn about our services; we have packages that can be customized to your condominium's needs!